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Workers can benefit from technology that
substitutes robots or other machines for their work by owning part of the
capital that replaces them

Robots, that is any sort of machinery from
computers to artificial intelligence programs that provides a good
substitute for work currently performed by humans, can increasingly replace
workers, even highly skilled professionals, and thus reduce opportunities
for good jobs and pay. But, with appropriate policies, the higher
productivity due to robots can improve worker well-being by raising incomes
and creating greater leisure for workers. Consider the way Google reduces
the need for reference librarians and research assistants, or the way
massive open online courses reduce the need for professors and lecturers.
How these new technologies affect worker well-being and inequality depends
on who owns them.

The future growth of Central and Eastern Europe (CEE)
depends on upgrading technology, exporting and coupling domestic technology efforts
while improving their position in global value chains. Current policies in the region
are not geared to these tasks, despite the availability of huge financial opportunities
in the form of EU structural funds. Existing policies are overly focused on research and
development (R&D) and neglect sources of productivity growth, such as management
practices, skills, quality, and engineering. The challenge is how to design industrial
and innovation policies so that they promote modernization and drive structural
change.

Job polarization can pose serious problems for
emerging economies that rely on worker reallocation from low-skilled to
middle-skilled jobs to converge toward advanced economies. Evidence from
Central and Eastern European (CEE) countries shows that structural change
and education expansion can prevent polarization, as they enable a shift
from manual to cognitive work and prevent the “hollowing out” of
middle-skilled jobs. However, in CEE countries they have also led to a high
routine cognitive content of jobs, which makes such jobs susceptible to
automation and computerization in the future.

Impacts of GVCs depend on lead firms,
specialization, skills, and institutions

Global value chains (GVCs) describe the
cross-national activities and inputs required to bring a product or service
to the market. While they can boost exports and productivity, the resulting
labor market impacts vary significantly across developing countries. Some
experience large-scale manufacturing employment, while others see a shift in
demand for labor from manufacturing to services, and from lower to higher
skills. Several factors shape the way in which a country’s labor market will
be impacted by GVC integration, including the type of sector, lead firms’
strategies, domestic skills base, and the institutional environment.

Labor productivity is generally seen as bringing
wealth and prosperity; but how does it vary over the business cycle?

Aggregate labor productivity is a central
indicator of an economy’s economic development and a wellspring of living
standards. Somewhat controversially, many macroeconomists see productivity
as a primary driver of fluctuations in economic activity along the business
cycle. In some countries, the cyclical behavior of labor productivity seems
to have changed. In the past 20–30 years, the US has become markedly less
procyclical, while the rest of the OECD has not changed or productivity has
become even more procyclical. Finding a cogent and coherent explanation of
these developments is challenging.

Poor public transport can reduce employment in
the formal sector

Public transport infrastructure has not kept up
with the demands of growing populations in cities in developing countries.
Infrastructure provision has historically been biased against less affluent
areas, so access to formal jobs is often difficult and costly for a large
part of the lower-income population. As a result, low-income workers may be
discouraged from commuting to formal jobs, lack information on job
opportunities, and face discrimination. Through these channels, constrained
accessibility can result in higher rates of job informality. Reducing
informality can be a target for well-designed transport policies.